State OKs tax capture for Aptiv's creation of advanced-safety engineering center in Troy

Aptiv will keep up to $30.7M of income tax withholdings to create 500 new jobs in Troy

Jobs said to pay at least 25 percent more than the regional average wage

New jobs are part of Aptiv's relocation of its Indiana technical center to Michigan

CoStar Group

Aptiv will renovate up to 186,000 square feet of its 381,713 square feet of space at 5725 Innovation Drive in Troy.

Aptiv PLC will get to keep up to $30.7 million of its employees' tax withholdings by creating 500 new jobs at its Troy headquarters.

The Michigan Strategic Fund on Tuesday approved the 10-year Good Jobs for Michigan tax capture for the autonomous-vehicle technology supplier, allowing the company to keep the income tax withholdings for 500 new engineers, support staff and electronic labs technicians as part of the relocation. Aptiv is expected to invest between $20 million and $30 million on the project.

The Michigan Economic Development Corp. said in a memo that allowing Aptiv to keep its employees' tax withholdings is necessary to sway the company to create its active-safety engineering center in Troy because over Indiana, where it was also considering. Though Aptiv plans to keep an office and headcount in Indiana, according to Rachelle Valdez, vice president of marketing and communications at Aptiv.

As part of the project, Aptiv will renovate up to 186,000 square feet of its 381,713 square feet of space at 5725 Innovation Drive in Troy, the MEDC said in the memo. The company leases an additional 92,000 square feet to Delphi Technologies, which spun off from the company earlier this year.

The Good Jobs for Michigan program was created as part of a three-bill package in 2017 when the state was pursuing massive investments from Tawainese electronics manufacturer Foxconn and Amazon's HQ2. Foxconn went to Wisconsin and Amazon recently announced it would split its second headquarters between New York City and suburban Washington, D.C.

The Michigan program allows businesses to keep all new employees' income tax withholdings for 10 years for creating 3,000 or more jobs that pay at least the average regional wage; keep half the income tax withholdings for up to five years for creating at least 500 jobs that pay the average regional wage or more; or keeping all the income taxes for 10 years for creating 250 or more jobs that pay at least a quarter more than the average regional wage.

Aptiv falls into the last category.

Aptiv is the third recipient of an award under the program. Previous awardees include pharmaceutical giant Pfizer Inc. and chip-testing equipment manufacturer KLA-Tencor.

According to the program guidelines, the Michigan Strategic Fund can strike up to 15 deals a year. No more than $200 million in incentives can be awarded — a provision that backers say distinguishes the program from the old, uncapped Michigan Economic Growth Authority program, for which the state is on the hook for billions of dollars in obligated credits and which also applied to companies that retained jobs.

Retail stores, pro sports stadiums and casinos can't qualify for the new tax breaks. Lawmakers would have to reauthorize the program if they want it to extend beyond 2019.

Aptiv is headquartered in Gillingham, England, from a tax perspective, but its operational headquarters remains in Troy. The supplier of autonomous vehicle software employees 147,000 employees and operates 14 technical centers, as well as manufacturing sites and customer support centers, in 45 countries.

It spun off its powertrain segment as Delphi Technologies PLC in Dec. 2017.